FBL Financial Group, Inc. (NYSE: FFG):
Financial Highlights
(Dollars in thousands, except per share
data)
Three months ended March 31, 2018 2017
Net income attributable to FBL Financial Group $ 23,631
$ 26,433 Non-GAAP operating income(1) 27,633 26,988 Earnings
per common share (assuming dilution): Net income 0.94 1.05 Non-GAAP
operating income(1) 1.10
1.08
FBL Financial Group, Inc. (NYSE: FFG) today reported net
income attributable to FBL Financial Group for the first quarter of
2018 of $23.6 million, or $0.94 per diluted common share, compared
to $26.4 million, or $1.05 per diluted common share, for the first
quarter of 2017. Non-GAAP operating income(1) totaled $27.6
million, or $1.10 per common share, for the first quarter of 2018,
compared to $27.0 million, or $1.08 per common share, for the first
quarter of 2017. First quarter 2018 earnings per share
reflects:
- The benefit of other investment-related
income of $0.11 per share
- Unfavorable mortality results in the
Life Insurance segment
- A lower effective tax rate due to the
Tax Cuts and Jobs Act of 2017
Non-GAAP operating income differs from the GAAP measure, net
income attributable to FBL Financial Group, in that it excludes the
initial impact of changes in federal statutory income tax rates and
tax laws, realized gains and losses on investments, and the change
in net unrealized gains and losses on derivatives and equity
securities. For further information on this non-GAAP financial
measure, please refer to Note (1) and the reconciliation provided
within this release.
"FBL Financial Group's first quarter 2018 earnings were strong
with net income of $0.94 per share and record first quarter
non-GAAP operating income of $1.10 per share," said James P.
Brannen, Chief Executive Officer of FBL Financial Group, Inc.
"We've had success with life sales, resulting in a four percent
increase in life insurance premiums collected in the first quarter
of 2018 compared to the prior year. In addition to increased
non-GAAP operating income, we returned $49 million of capital to
shareholders in the first quarter of 2018 via a $1.50 per share
special dividend and an increased regular quarterly dividend of
$0.46 per share."
Product Revenues. Premiums and product charges for the
first quarter of 2018 totaled $79.6 million compared to $77.6
million in the first quarter of 2017. Interest sensitive product
charges increased three percent while traditional life insurance
premiums increased two percent during the quarter. Premiums
collected(2) in the first quarter of 2018 totaled $169.7 million
compared to $169.9 million in the first quarter of 2017. Annuity
premiums collected decreased three percent while life insurance
premiums collected increased four percent.
Investment Income. Net investment income in the first
quarter of 2018 totaled $101.0 million, compared to $101.0 million
in the first quarter of 2017. This reflects an increase in average
invested assets offset by lower investment yields. The annualized
yield earned on average invested assets, with securities at
amortized cost, including investments held as securities and
indebtedness of related parties, was 5.19 percent for the three
months ended March 31, 2018, compared to 5.30 percent for the three
months ended March 31, 2017. At March 31, 2018, 97 percent of
the fixed maturity securities in FBL Financial Group's investment
portfolio were investment grade debt securities.
Benefits and Expenses. Benefits and expenses totaled
$155.7 million in the first quarter of 2018, compared to $148.0
million in the first quarter of 2017. Death benefits, net of
reinsurance and reserves released, totaled $32.6 million in the
first quarter of 2018, compared to $29.6 million in the first
quarter of 2017. By its nature, mortality experience can fluctuate
from quarter to quarter.
Net Realized Gains/Losses. In the first quarter of 2018,
FBL Financial Group recognized net realized losses on investments
of $1.7 million. This is attributable to realized gains on sales of
$0.1 million and change in unrealized gains/losses on equity
securities of $1.8 million. In addition, other-than-temporary
impairments totaled $1.3 million.
Earnings Outlook. While subject to volatility from
mortality experience, investment prepayment fee income and the
impact of unlocking actuarial assumptions, non-GAAP operating
income for the final nine months of 2018 is expected to compare
favorably to the non-GAAP operating income for the final nine
months of 2017, due primarily to the impact of the Tax Act on FBL
Financial Group’s effective tax rate. The benefit of the lower
effective tax rate is expected to be partially offset by decreases
in non-GAAP pre-tax operating income in the Corporate
segment. The Corporate segment results in the final nine
months of 2018 are expected to be negatively impacted, relative to
the comparable period in 2017, by the impact of less favorable
equity market performance on the closed-block variable business and
lower equity income from low income housing tax credit (LIHTC)
investments. The expected decrease in income from LIHTC
investments is driven primarily by the lower effective tax
benefit, due to the Tax Act, on future investment partnership
losses.
Stock Repurchases. During the first quarter of 2018, FBL
Financial Group repurchased 99,312 shares of its Class A common
stock. In March 2018, FBL Financial Group announced the
authorization of a new stock repurchase program for up to $50.0
million.
Capital and Book Value. As of March 31, 2018, the
book value per share of FBL Financial Group common stock totaled
$50.78, compared to $55.59 at December 31, 2017. Book value
per share, excluding accumulated other comprehensive income(3),
totaled $43.28 at March 31, 2018, compared to $44.16 at
December 31, 2017. The March 31, 2018 company action
level risk based capital ratio of FBL Financial Group's wholly
owned subsidiary, Farm Bureau Life Insurance Company, was
approximately 543 percent.
Further Financial Information. Further information on FBL
Financial Group's financial results, including results by segment,
may be found in FBL Financial Group's financial supplement,
available on its website, www.fblfinancial.com.
Conference Call. FBL Financial Group will hold a
conference call with investors tomorrow, May 4, 2018, at 9:00
a.m. Eastern Time. The call will be webcast and a replay will be
available on FBL Financial Group's website.
Certain statements in this release concerning FBL Financial
Group's prospects for the future are forward-looking statements
intended to qualify for the “safe harbor” from liability
established by the Private Securities Litigation Reform Act. These
statements generally can be identified by their context, including
terms such as “believes,” “anticipates,” “expects,” or similar
words. These statements involve certain risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied in the forward-looking statement. These risks
and uncertainties are detailed in FBL Financial Group's reports
filed with the Securities and Exchange Commission and include, but
are not limited to, changes in interest rates, difficult conditions
in financial markets and the economy, lack of liquidity and access
to capital, investment valuations, competitive factors, a decrease
in ratings, changes in laws and regulations, differences between
actual claims experience and underwriting assumptions,
relationships with Farm Bureau organizations, the ability to
attract and retain sales agents and adverse results from
litigation. These forward-looking statements are based on
assumptions which FBL Financial Group believes to be reasonable;
however, no assurance can be given that the assumptions will prove
to be correct. FBL Financial Group undertakes no obligation to
update any forward-looking statements.
FBL Financial Group is a holding company whose purpose is to
protect livelihoods and futures. Operating under the consumer brand
name Farm Bureau Financial Services, it offers a broad range of
life insurance and annuity products distributed by multiline
exclusive Farm Bureau agents. In addition, FBL Financial Group
manages all aspects of two Farm Bureau affiliated property-casualty
insurance companies for a management fee. Headquartered in West Des
Moines, Iowa, FBL is traded on the New York Stock Exchange under
the symbol FFG. For more information, please visit
www.fblfinancial.com and www.fbfs.com.
FBL Financial Group, Inc. Consolidated Statements
of Operations (Unaudited) (Dollars in thousands, except per
share data) Three months ended
March 31, 2018 2017 Revenues:
Interest sensitive product charges $ 30,098 $ 29,201 Traditional
life insurance premiums 49,497 48,434 Net investment income 101,022
100,994 Net realized capital losses (1,747 ) (403 ) Net
other-than-temporary impairment losses recognized in earnings
(1,295 ) (66 ) Other income 4,600 3,760
Total revenues 182,175 181,920 Benefits and expenses:
Interest sensitive product benefits 61,345 62,760 Traditional life
insurance benefits 45,456 42,954 Policyholder dividends 2,551 2,553
Underwriting, acquisition and insurance expenses 39,577 34,353
Interest expense 1,213 1,212 Other expenses 5,593
4,151 Total benefits and expenses 155,735
147,983 26,440 33,937 Income taxes (4,687 )
(10,733 ) Equity income, net of related income taxes 1,855
3,231 Net income 23,608 26,435 Net loss
(income) attributable to noncontrolling interest 23
(2 ) Net income attributable to FBL Financial Group, Inc. $
23,631 $ 26,433 Earnings per common share -
assuming dilution $ 0.94 $ 1.05 Weighted
average common shares 25,003,691 25,030,462 Effect of dilutive
securities 15,818 21,914 Weighted
average common shares - diluted 25,019,509
25,052,376
(1) Reconciliation of Net Income Attributable to FBL
Financial Group to Non-GAAP Operating Income - Unaudited
In addition to net income, FBL Financial Group has consistently
utilized non-GAAP operating income, a financial measure common in
the life insurance industry that is not prepared in accordance with
U.S. generally accepted accounting principles (GAAP), as a primary
economic measure to evaluate its financial performance. Non-GAAP
operating income equals net income attributable to FBL Financial
Group adjusted to exclude the initial impact of changes in federal
statutory income tax rates and tax laws, realized gains and losses
on investments, and the change in net unrealized gains and losses
on derivatives and equity securities, which can fluctuate greatly
from period to period. These fluctuations make it difficult to
analyze core operating trends. In addition, for derivatives not
designated as hedges, there is a mismatch between the valuation of
the asset and liability when deriving net income (loss).
Specifically, call options relating to indexed business are
one-year assets while the embedded derivatives in the indexed
contracts represent the rights of the contract holder to receive
index credits over the entire period the indexed products are
expected to be in force. This non-GAAP measure is used for goal
setting, determining short-term incentive compensation and
evaluating performance on a basis comparable to that used by many
in the investment community. FBL Financial Group believes the
combined presentation and evaluation of non-GAAP operating income,
together with net income, provides information that may enhance an
investor's understanding of FBL Financial Group's underlying
results and profitability. A reconciliation is provided in the
following table:
Three months ended March 31,
2018 2017 (Dollars in thousands,
except per share data)
Net income attributable to FBL Financial Group $ 23,631 $ 26,433
Adjustments: Initial impact of the Tax Act 1,069 — Net realized
gains/losses on investments (a) (b) 2,424 554 Change in net
unrealized gains/losses on derivatives(a) 509 1
Non-GAAP operating income $ 27,633 $ 26,988 Non-GAAP
operating income per common share - assuming dilution $ 1.10 $ 1.08
(a) Net of adjustments, as applicable, to
amortization of unearned revenue reserves, deferred acquisition
costs, value of insurance in force acquired, interest sensitive
policy reserves and income taxes attributable to these items.
(b) Beginning in 2018, the change in net
unrealized gains/losses on equity securities is included as an
adjustment to net income.
(2) Premiums Collected - Net statutory premiums collected
is a non-GAAP measure and includes premiums collected from
annuities and universal life-type products. It is a useful metric
for investors as it is a measure of sales production. For GAAP
reporting, these premiums received are not reported as
revenues.
(3) Reconciliation of Book Value Per Share Excluding
Accumulated Other Comprehensive Income - Unaudited
March 31, 2018
December 31, 2017 Book value per share $ 50.78 $
55.59 Less: Per share impact of accumulated other comprehensive
income 7.50 11.43 Book value per share, excluding
accumulated other comprehensive income $ 43.28 $ 44.16
Book value per share excluding accumulated other comprehensive
income is a non-GAAP financial measure. Accumulated other
comprehensive income totaled $186.2 million at March 31, 2018
and $285.0 million at December 31, 2017. Since accumulated
other comprehensive income fluctuates from quarter to quarter due
to unrealized changes in the fair value of investments caused
principally by changes in market interest rates, FBL Financial
Group believes this non-GAAP financial measure provides useful
supplemental information.
FBL Financial Group, Inc. Condensed Consolidated
Balance Sheets (Unaudited) (Dollars in thousands)
March 31, 2018
December 31, 2017 Assets Investments $
8,589,500 $ 8,620,243 Cash and cash equivalents 13,653 52,696
Deferred acquisition costs 357,861 302,611 Other assets 439,028
439,100 Assets held in separate accounts 638,751
651,963 Total assets $ 10,038,793 $ 10,066,613
Liabilities and stockholders' equity Liabilities Future
policy benefits $ 7,208,510 $ 7,050,465 Other policy funds, claims
and benefits 634,169 634,128 Debt 97,000 97,000 Other liabilities
196,176 244,207 Liabilities related to separate accounts
638,751 651,963 Total liabilities 8,774,606 8,677,763
Stockholders' equity FBL Financial Group, Inc. stockholders'
equity: Preferred stock 3,000 3,000 Class A common stock 153,195
153,589 Class B common stock 72 72 Accumulated other comprehensive
income 186,222 284,983 Retained earnings 921,663
947,148 Total FBL Financial Group, Inc. stockholders' equity
1,264,152 1,388,792 Noncontrolling interest 35 58
Total stockholders' equity 1,264,187 1,388,850 Total
liabilities and stockholders' equity $ 10,038,793 $ 10,066,613
Common shares outstanding 24,837,976
24,930,526
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180503006343/en/
FBL Financial GroupKathleen Till Stange, 515-226-6780V.P.
Corporate & Investor
RelationsKathleen.TillStange@FBLFinancial.com
FBL Financial (NYSE:FFG)
Historical Stock Chart
From Apr 2024 to May 2024
FBL Financial (NYSE:FFG)
Historical Stock Chart
From May 2023 to May 2024